Indian turmeric market shows firmer tone
Indian turmeric prices have shown a firmer tendency of late on early claims that next year’s crop could fall short of expectations.
This suggestion is based on reports from local traders that some of the production areas have not received enough rainfall and the soil moisture levels are therefore not adequate to ensure a decent sized crop in 2016.
One UK trader told that it is extremely difficult at this stage to gauge whether the predictions will prove founded or not. The next crop will not be due to start arriving on the local markets until January 2016 at the earliest and most of the big harvesting is done in February/March, being followed by sun drying of the new crop turmeric.
Very small amounts are produced from a few areas now but these volumes are so small as to not be of any impact on the market.
The trader said that in the last week he had seen prices increase. “This is the time when the product is sown and it starts rooting. The ground has to be sufficiently moist to allow it to grow. It seems that the moisture level in some areas is much less than what is normally required to have a good crop. This could just be speculators who are trying to push it up or people who have got a stake in it trying to say there is not enough moisture in the ground and therefore next year’s crop won’t be good, so the current prices should go up,” he added.
This assessment was based on conversations the trader had recently had with a number of his contacts at origin.
The actual monsoon season for 2015 is due to end on September 15.
The trader explained that based on his own monitoring of the monsoon progress this year he would sum the situation up as being one of “erratic” monsoon rains. In other words, the actual level of monsoon activity might not have been poor overall, but the inconsistent performance could feasibly have led to inadequate soil moisture in certain areas.
The trader recalled that at the outset of the season there had even been forecasts for a drought situation, but these had subsequently proved to be unjustified.
He indicated current export price indications of USD1,550-1,650 per tonne c&f EMP for turmeric powder of 2% curcumin content. Better qualities – such as with 3% curcumin content or more – would be between USD1,800-1,900/tonne c&f EMP
There is still material left unsold from the 2014 crop but it is felt that this will easily be absorbed over the coming weeks as India’s festival season gets under way, starting with Dussehra on October 22 and including the key Diwali celebrations in the first week of November.
The trader said he would therefore expect additional upward pressure on prices ahead.
“If you look at the fundamentals the market is entering a bullish phase and the prices should go up,” he suggested.
Purchasing for this spate of festivals is expected to start in a week to 10 days’ time.